Microsoft's deal for Nokia hits snag as Chinese regulators step in

Microsoft’s purchase of Nokia’s phone business has been put on hold after Google and Samsung lobbied Chinese regulators over fears of sky-high patent prices.

Despite getting approval from EU and US regulators, the €5.44bn deal has been delayed while Chinese antitrust authorities scrutinise patent licensing fees. China’s Ministry of Commerce is still likely to approve the deal but will seek assurances from Nokia over how much it will charge rival companies to use its patents.

Microsoft and Nokia had hoped to conclude the deal by the end of March, but have now admitted that it won’t be completed until next month. In an update Microsoft general counsel Brad Smith said it expected the deal to close “in April 2014”.

“We are nearing the final stages of our global regulatory approval process. Currently, we are awaiting approval confirmation in the final markets.”

Patent licensing is massive business for big tech firms. Microsoft makes around $5 (£3) on every Android handset sold due to patents it holds. Analysts estimate that Microsoft makes upwards of $2bn a year from Android.

The Microsoft and Nokia deal was announced in September but the delay is not exceptional for such a large acquisition. In 2011 it took Microsoft five months to purchase online chat company Skype.

Once the deal is complete Microsoft will own Nokia’s “device and services business” as well as licences for Nokia's patents and mapping services. Microsoft is expected to continue manufacturing handsets using the Nokia Lumia name. As part of the deal 32,000 employees will transfer from Nokia to Microsoft.

A new, streamlined Nokia, without the burden of its loss-making devices division, will focus on telecoms, software and patents. It is expected to elaborate on its future plans once the deal with Microsoft is completed.

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November 25,2021

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